Ch 7 + 8 Flashcards
Describe limited partnership
One or more general partners and one or more limited partners (s50)
The liability of limited partners is limited to their contribution or agreed upon contribution to the limited partnership (s57, 63)
A limited partner is not liable as a general partner unless they take part in managing the limited partership (s64)
General partners have full liability.
What is a limited partnership, how is it formed, what is the significance of forming one
Not a legal entity, GP must perform transactions on its behalf
Requires a GP and LP
LPs can share in profits and return of capital in proportion to their contributions (s61)
LPs cant manage the limited partnership or will be liable as GP (s64)
MUST file certificate under s51 to form Limited Partnership or else it will be held as general partnership, even where intention exists.
s51 requires name, GPs name/address, nature of business, and the LPs contributions and entitlements.
Explain the separation of ownership and control in the context of a limited partnership
LPs are typically major contributors of capital and thus owners
LPs dont control the business
This separation of ownership and management puts LPs at mercy of GP. (can be addressed via agreement)
GP holds property for benefit of limited partnership (edenvale, harrison hydro). This also means tax exemption under s87 of indian act wouldnt always apply, since GP is the one it would be applied to (Tron).
LP can forfeit their limited liability if they take part in management of the limited partnership (s64).
Explain the problem that may arise if a limited partner is also the officer of a corporate general parter, noting relevant case law
s64 –> LP not liable unless they take part in managing the limited partnership.
LPs only liable if they take part in management of GP (haughton) BUT they are NOT liable if they are acting only in their capacity as an officer of the GP (Nordile).
Explain LLP form of association and the difference btwn partial and full shield liability
Partial shield (AB, manitoba): partners not liable for malpractice of fellow partners/employees unless they were direct supervisors. Partners dont have to indemnify each other for malpractice. They are still personally liable for firm debts. In AB this can only be used by professions as regulated by statute.
Full shield (BC): Not personally liable for partnership obligations (s104) unless they knew of wrongful act of a fellow partner and didnt take actions of a reasonable person to prevent.
Note: In BC partners can agree to have either full or partial in their agreement and it is not limited to use by professions. Partners have the full benefit of protection from liability and can still take part in management without becoming personally liable.
Partners may waive limited liability in agreements with creditors.
LLP suffix is required (s100), registration is required or else will be held as GPs (s94)
